Lafarge Africa records Impressive PAT of N48.64bn in Q1, 2025
Lafarge Africa (WAPCO) kicked off FY 2025 with a commanding performance, posting a PAT of N48.64bn in Q1—marking a +836.7% y/y surge from N5.19bn in Q1 2024. This stellar earnings delivery was underpinned by strong revenue momentum, margin expansion, and a complete reversal in FX-linked finance charges.
The result represents the Group’s strongest Q1 bottom line on record, driven by improved market dynamics, price and cost alignment, and more capital-efficient operations. Revenue rose 80.3% y/y to N248.35bn, buoyed by steady demand from infrastructure projects. Cement sales accounted for 98% of revenue, with aggregates and concrete contributing marginally.
The company benefited from improved market pull through, with stronger sales execution. Gross profit jumped 87.3% y/y to N122.97bn as Lafarge effectively navigated elevated energy and input costs. Gross margin expanded to 49.5%, up 187bps, reflecting the effect of increased energy substitution and alternative fuel use (e.g., Compressed Natural Gas trucks), operating leverage from higher volumes and strategic inventory optimization. That said, selling and distribution costs surged 43% y/y to N38.91bn, driven by outbound logistics and diesel cost pressure, while admin costs rose 56% on FX-adjusted office and technical service charges. Total operating expense grew by 45.9%, underlining the inflationary headwinds still at play.
A key take-away is the swing in finance charges from a net loss of N23.1bn in Q1 2024 to a mere N388m in Q1 2025. This was driven by a N1.08bn FX gain, compared to a N21.8bn FX loss in the prior year. Lafarge Africa’s interest-bearing borrowings fell by 93.3% y/y to N1.90bn in Q1 2025, down from N4.72bn in Q1 2024, reflecting a strategic shift toward a lighter, short term funding structure. Non-current borrowings dropped to N1.59bn from N4.39bn, indicating repayment of legacy debt facilities, while current borrowings stood at a minimal N313m, suggesting a preference for short-tenor obligations with lower interest exposure.
Supported by a more stable exchange rate, this shift helped contain FX risks and led to a sharp reduction in finance costs. Interest expenses remained subdued as Lafarge maintained its deleveraged balance sheet stance.
Despite the strong income performance, net operating cash flow was negative at N118.4bn, mainly due to a build-up in working capital, especially payables and contract liabilities. However, the Group’s liquidity profile remains solid with cash reserves of N103.1bn, and zero net debt.
Lafarge Africa entered 2025 with uncertainty over pricing, earnings visibility, and cash reserves. The successful execution of its green logistics and energy optimisation strategy (via CNG adoption and waste heat recovery) will be crucial in managing margin pressures in an increasing cost environment.
Meanwhile, the pending acquisition by Huaxin Cement, expected to close post-regulatory approvals, casts a spotlight on its future long-term strategic direction. Clarity around governance, capital allocation, and plant expansion plans post-transaction close will shape investor sentiment.
Lafarge Africa declared an interim dividend of N4/share for the quarter ended 31st March 2025. SOURCE: Coronation Asset Management Limited
